Passive or proactive capacity sharing? A perspective of cooperation and competition between two regional ports

ABSTRACT

Port operations in an uncertain environment and compete with nearby ports in a same region to incentive carriers. In this paper, we consider a game-theoretical model to analyze the co-opetition between two ports with capacity sharing. Three competitive game interactions are discussed, namely, benchmark model, passive sharing, and proactive sharing to maximize the payoff by determining optimal berth quantity and service price. The observations show that when faced with a strengthened rival with sufficient capacity, the optimal ports’ decision for the capacity sharing mode is determined by the tradeoff between the benefit that is gained from the sharing capacity and the losses that are caused by port competition. Moreover, our research comprehensively examines how the port operation cost and the difference between the potential capacity demand of two terminals affect ports’ optimal strategy selection and presents a broad set of decision outcomes, which provides new insights for port coopetition.

KEYWORDS:

• Capacity sharing
• port operations
• cooperation and competition

Acknowledgments

The authors thank the editor, the anonymous reviewers, and the seminar participants at Shanghai Jiao Tong University, Shanghai University, Southern University of Science and Technology, University of Toronto, and York University for thoughtful comments, which have helped us significantly improve the quality.

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

This work was supported by the National Natural Science Foundation of China [Grant 71974123] and Innovation Program of Shanghai Municipal Education Commission [Grant 2017–01–07–00–10–E00016].